Peanut co-op builds for the future

Adding value and profitability to crop production is a stated goal of most marketing cooperatives. But organizers of the Tift Area Peanut Growers Cooperative have set their sights on a longer-term goal.

“Me and my son are farming together, and that's a big reason I'm a part of this — to help insure a future for him,” says southwest Georgia farmer Irvin Branch. “In the future, we'll have to do things differently to stay in business.”

Neighboring farmer Carroll Coarsey agrees. “You don't see many small to medium-acreage farmers who feel as though their children have a future in farming. A grower cooperative provides a way for these farmers to have unity and to have a voice. Small and medium-acreage farmers must band together to survive.”

Branch is chairman and Coarsey vice chairman of the Tift Area Cooperative, which began organizing in the late summer and fall of 2001. The primary purpose of the cooperative is to shell and market the peanuts of its members.

The Tift County Cooperative Extension Service and the county's development board have been instrumental in the creation of the cooperative, says Branch. “We started off by contacting and having meetings with interested farmers. We're charging a one-time $100 membership fee to help us gauge interest. We currently have about 120 members, and they'll have the first right to buy stock in the cooperative,” he says.

The goal of the farmer-owned cooperative, says Branch, is to return dividends to the shareholders. Shares of stock will be sold at a specified dollar amount based on the cost as determined by a feasibility study conducted by the University of Georgia.

The purchase of a share of stock would give the farmer the right and obligation to supply 1 ton of farmer-stock peanuts. Stock currently is priced at $135 per share. The cooperative was ready to move forward with a stock offering this past fall, he says, but last year's poor crop set things back. The Tift County Development Authority has been supportive in securing land for a shelling plant, he adds. “We would like to have a commitment of about 60,000 tons of peanuts, and we could start with 50,000 tons. That's our goal, and it'll probably take about 150 farmers to reach the required tonnage,” says Branch.

The initial plans, he says, called for recruiting farmers from Tift and the immediately surrounding counties. “But after getting into it, we realized that we might have to establish buying points further outside the Tifton area. We need the volume for the cooperative to work properly,” he says.

One share of stock, explains Branch, is equal to 1 ton of farmer-stock peanuts. “After all expenses are paid, dividends will be paid to the stock holders. We'll have a board of directors comprised of farmers — 12 to 15 — representing the different areas served by the cooperative. The co-op will build and own the shelling plant and warehouses for storing peanuts.”

The cooperative will increase value and profitability by allowing farmers to get one step closer to the consumer, he says.

“This is the first step. We eventually want to get even closer to the consumer, but we need to start with shelling, which is the next step from farming in the process. The only way for us to survive is to get more of the dollar that's out there. The closer we get to consumers, the more money we'll make.”

The ultimate goal of the grower cooperative, says Branch, is to go directly to manufacturers or to grocery stores with value-added products.

“We hope to make several dollars more per ton from our peanuts. The University of Georgia has completed our feasibility studies and business plans, and they show that there's a place for us. We've talked to manufacturers and brokers, and they show a willingness to work with us.”

He says it'll probably take another year to sell stock and secure the required tonnage to operate the shelling plant. The cooperative has a goal of having 80 percent of its tonnage from irrigated peanuts, he says.

Branch, who grows peanuts and cotton, is almost 100-percent irrigated, and he follows at least a three-year rotation for peanuts. “Irrigation and rotation are required for a quality peanut crop, and quality is being demanded by our customers. We're striving to get the better quality farmers into this cooperative. Most farmers who are still in business are doing these things already.”

The total cost of the grower cooperative is estimated at about $17 million, says Branch, with about $6.5 million required to get things started.

Coarsey, who grows peanuts, cotton and a few vegetables, says the Tift Area Cooperative is comprised mostly of small and medium-acreage farmers.

“The smaller you are, the more important it is to be a part of a larger group. We have some fairly large-acreage members — some who grow as many as 1,000 acres of peanuts — but they're the exception rather than the rule. We have more members in with 50 to 200-acre farms, and those are the ones who'll really benefit from a growers co-op,” says Coarsey.

Farmers in the area have been very receptive to the idea of a grower cooperative, he says. “We've had four or five dry years, followed by a wet harvest this past year. Farmers are a little reluctant now to stick their necks out too far, and we understand that. It'll take time for this to work, and we're being very cautious each step of the way. We didn't get into farming overnight, and this cooperative won't happen overnight.”

Coarsey stresses that while the co-op is called the Tift Area Peanut Growers Cooperative, it is by no means limited to Tift County. “Our board represents eight counties, and we've seen interest from growers throughout the state.”

Producers seeking a marketing alternative other than contracting or putting their peanuts in the loan should consider the benefits offered by a cooperative, says Nathan Smith, University of Georgia Extension economist.

“If you aren't comfortable with the marketing aspect of farming or would rather someone else do it for you, a cooperative would be an option. There are benefits to pooling, and a co-op takes advantage of those benefits,” says Smith.

Many, growers, he says, are searching for ways to increase their returns and profits beyond the farm gate. The decision to join a cooperative should be made only after careful consideration, says Smith.

“Look at the co-op itself, and make sure you're comfortable with the management and other aspects of how the co-op is operated. Understand how the co-op is structured, and make sure you're fully aware of your obligations once you join.

“There are different types of cooperatives. A traditional or open co-op allows anyone to join and allows you to deliver however much you want to deliver. In a closed co-op, you're obligated to deliver a certain volume,” he says.

The new peanut program as mandated by the latest farm bill made grower cooperatives a viable option for peanut producers, says Smith.